Yum Stock Price: Why it is looking strong despite COVID-19 triggering Pizza Hut franchiser bankruptcy

  • NPC International, the largest Pizza Hut franchisee, filed for Chapter 11 bankruptcy.
  • The now-defunct firm failed to reach an agreement with YUM! Brands, which operates various fast food chains. 
  • The COVID-19 felled another company, but it seems that the larger corporation will live another day.
  • NYSE: YUM is holding up above $87, showing its strength.

Chewing off a small finger to continue staying alive – that is a conclusion investors are making around Yum! Brands. The Lousiville, the Kentucky-based company, trading under NYSE: YUM, runs several American fast-food chains including Taco Bell, The Habit Burger Grill, and Pizza Hut

NPC International, the largest Pizza Hut franchisee, is unable to withstand the pressure related to COVID-19 and has filed for Chapter 11 bankruptcy. How can a pizza company fail when deliveries to homes are on the rise? Nevertheless, this conclusion seems to have already taken its toll in the past.

It is also essential to note that restaurants are operated separately on the other side of the Pacific under Yum China. While the disease is raging in the US, it is under control in the world's second-largest economy. That is also supporting the shares. 

Moreover, companies under Chapter 11 bankruptcy continue operating – they just become protected from debtors while the restructuring is underway. Can a new model revive Pizza Hut deliveries while COVID-19 is raging? That is an open question, yet investors see the broader Yum Brands corporation as fairly valued. 

Yum! Brand Inc. Stock

NYSE: YUM is changing hands at above $87, up over $1 and above 1% – in line with the gains on the broader S&P markets. Investors seem to shrug off the news about Pizza Hut and focus on the upbeat US jobs report. Non-Farm Payrolls showed an increase of 4.8 million positions, beating economists' expectations.

The 52-week high stood at $119.72  – less than a 50% gain from current pricing. With the coronavirus pandemic lifting its ugly head once again, Yum's price is remarkably high. It has already risen considerably from the 52-week low of $54.95 recorded at the peak of the crisis in March. All in all, Yum is probably yummy enough for investors – at least for now. 

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